Fundraiser takes the lion's share

By JAMES GARDINER

A telemarketing company employed by Lions and Rotary clubs throughout New Zealand and Australia is raising millions of dollars for charity but taking up to 80 cents in every dollar for its own expenses and profits.

The Auckland-based company, International Entertainment, has operated on both sides of the Tasman for 17 years.

It puts on magic shows and film festivals for underprivileged, disabled and terminally ill children in major towns and cities in both countries.

The company will not talk about its finances but figures provided by a former employee suggest its income tops $10 million a year and could be double that amount.

Most of the business is in the cities of Sydney, Melbourne, Auckland, Brisbane, Perth and Adelaide, each worth over $1 million a year in donations, but large towns such as Timaru and Taupo are also targeted.

Appeals in Wellington, Christchurch, Dunedin and Hamilton are all believed to gross $100,000 or more.

Other charities, such as the Blind Foundation and Cancer Society, say they aim to keep fundraising costs below 25 per cent.

Some Lions and Rotarians are now questioning whether the fundraisers are giving them and the charities they support a fair return.

In Sydney former Fairfield Lions Club president Butch Chapman said he had "had nothing but grief" from International Entertainment since starting his own telemarketing business with another Lions club.

"At this year's convention in Hobart there's going to be a move to wipe International Entertainment from working with Lions Clubs."

Other telemarketers say the method is an expensive form of fundraising but that it can still be profitable, with a 50 per cent return to the charity.

Two of the original clubs - and the biggest annual fundraisers in New Zealand - are in Auckland.

Remuera Lions and Newmarket Rotary put on a magic show and a film festival respectively each year.

International Entertainment is owned and run by a former magician, Eugene McCarthy and his wife, Rosemary. The McCarthys, both in their 50s, are Americans, resident in New Zealand since 1987.

The McCarthys originally agreed to an interview then said they had legal advice not to proceed because of an outstanding lawsuit against a former employee.

"The cost of fundraising is high," Mr McCarthy said.

He said he had made an average of $30,000 a year over the past 37 years, although he acknowledged the past five years had been "real good".

Auckland barrister Karen Soich, acting for the McCarthys and International Entertainment, said the business had been operated successfully and professionally but expected to make a $120,000 loss this year.

Each year, around September to November, the magic show tours through about 50 towns and cities in Australia and New Zealand.

The show is highly regarded, according to Lions clubs. Last year 15,000 saw it in Auckland alone.

The film festivals for children are also popular. Between 1500 and 2200 children a year receive free entry to theatres and can choose between several films with free drinks, popcorn and entertainment from a clown provided along with transport to and from the theatre if required.

But the cost to Auckland businesspeople - more than $1 million a year - from both appeals far exceeds the combined cost of putting on the events, which appears to be no more than $30,000.

Service organisations like Lions and Rotary, with shrinking memberships and growing demands on members' time, had seen the fundraisers as nothing but positive, until now.

"How else would we raise $130,000 to $150,000?" said Newmarket Rotary president John Meadowcroft. "That is helping a lot of people, changing the lives of a lot of people. The double bonus for us is that we're getting all these kids to the movies."

Remuera Lions president Grant McKenzie expressed identical sentiments. He said the magic show was of international calibre and $30 a seat for 15,000 seemed like good value.

He said the club had not previously considered the true costs of staging the show throughout Australasia in comparison with the gross revenue. It had been told that the Auckland fundraising subsidised the cost of taking the magic show to smaller centres.

Mr McKenzie said service organisations relied on their reputations and that meant being completely open with the public.

"It surprises me that they're not taking that same attitude. We now want to know what the actual costs and profit margins are."

Mr Meadowcroft said he also would like to know the actual costs of the telemarketing operation and staging the film festival. "We're not privy to that."